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Insurance carriers, brokers and businesses need to work together to satisfy the extensive workers’ comp reporting requirements many states are requiring. (Photo: Shutterstock)

Because workers’ compensation premiums are usually driven by employer payroll, carriers audit the payroll figures to ensure the worker classifications are accurate and that the premiums reflect the covered risks. States and the rating bureaus have stringent rules around what counts as payroll and how to calculate premiums. Regulators also audit carriers to ensure their premium calculations are consistent and accurate. Every carrier is held to the same standard to create a fair and competitive market.

The premium audit process can be very contentious because it is labor-intensive, and no one wants to be told they owe an additional premium on an expired policy. However, every workers’ compensation policy has this as a condition of the coverage.

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